* Dalian iron ore recovers from near 2-pct drop, rebar steady
* Recent gains in iron ore prices overdone -ANZ
By Manolo Serapio Jr
MANILA, Aug 12 (Reuters) - Dalian iron ore futures pared losses on Wednesday on hopes demand for the steelmaking raw material would remain high as China's steel exports get a boost from Beijing's devaluation of the yuan.
China allowed the yuan to fall sharply for a second straight day on Wednesday, cutting investor appetite for risky assets from equities to most commodities.
But Chinese iron ore futures dropped only marginally. The most-traded iron ore for January delivery on the Dalian Commodity Exchange was down 0.4 percent at 374.50 yuan ($58) a tonne by midday, after falling as much as 1.9 percent earlier.
"Chinese mills will look to export more steel products with the devaluation of the yuan. That will support demand for iron ore," said a Shanghai-based trader.
China exported 9.73 million tonnes of steel products in July, up 21 percent from a year ago, and near the record high of 10.29 million tonnes in January.
Shrinking domestic demand amid a slowing economy has fueled brisk steel exports from the country, with some Chinese steelmakers said to be selling output abroad at a loss, sparking anger from producers elsewhere.
On Tuesday, iron ore for immediate delivery to China's Tianjin port slipped 0.7 percent to $55.90 a tonne, according to The Steel Index, after scaling a one-month high of $56.40 last week.
"We believe the recent gains in iron ore prices are overdone as supply builds further in the second half of 2015," ANZ Bank said in a note.
ANZ said it initiated a short position with iron ore expected to test $50 in the short term amid slowing steel demand in China.
Adding to more supply from Australia and Brazil, India's top iron ore exporting state of Goa resumed production on Monday after nearly three years, led by Vedanta Ltd VDAN.NS , India's largest private miner.
The January rebar contract on the Shanghai Futures Exchange was up 0.2 percent at 2,064 yuan a tonne.
But spot rebar prices remain higher, at around 2,300 yuan a tonne in Shanghai, the trader said, on expectations of tighter supply when Beijing curbs production to clear skies ahead of a big parade in September to commemorate the 70th anniversary of the end of World War Two.
Global miner Rio Tinto (LONDON:RIO) will offer 100,000 tonnes of 61-percent grade Pilbara iron ore fines at a tender closing on Wednesday, traders said.
Rebar and iron ore prices at 0420 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
2064
+3.00
+0.15 DALIAN IRON ORE DCE DCIO JAN6
374.5
-1.50
-0.40 SGX IRON ORE FUTURES SEP
50.77
-0.39
-0.76 THE STEEL INDEX 62 PCT INDEX
55.9
-0.40
-0.71 METAL BULLETIN INDEX
56.22
-0.18
-0.32
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.4261 Chinese yuan)